Cruise Windstar acquisition of Seabourn ships shakes up yacht cruising By Tom Stieghorst / February 25, 2013 Share 1 -- In the Hot SeatAndrew Todd, president of Windstar Cruises parent Xanterra Parks & Resorts, talked with cruise editor Tom Stieghorst about the acquisition of three Seabourn ships. Read More The sale of Seabourn’s three small ships to Windstar Cruises reshapes the future for both cruise lines and the competitive landscape for the yacht-cruising segment in general. Seabourn’s three 208-passenger vessels will transition to Windstar in 2014 and 2015, leaving Seabourn with three nearly new 450-passenger ships and perhaps a fourth to be ordered this year. The price paid for Seabourn’s Spirit, Pride and Legend, which date from the late 1980s and are collectively known as “the triplets,” was not disclosed. They will continue to make all currently booked Seabourn cruises until they leave its fleet. For Windstar, the ships mark a departure. Since its founding as Windstar Sail Cruises in 1984, the line has operated modern tall ships with computer-controlled sails that augment motor propulsion. But Windstar executives have concluded that the sails are not essential to the line’s success. “Windstar is proud of its heritage in sailing, but what our guests are most enthusiastic about is our intimate, yacht style of cruising,” Windstar CEO Hans Birkholz said. “This style is the core of our brand experience.” Anne Scully, a travel agent at McCabe World Travel, in McLean, Va., said Windstar had little choice but to de-emphasize the sails since they often couldn’t be used because of weather or other reasons. “I only sold that as ‘on a good day, when weather permits, the sails will be up,’” she said. Windstar is on a comeback trail following the bankruptcy of its parent company, Ambassadors International. It was acquired in 2011 for $39 million by Xanterra Parks and Resorts, which spent $18 million to refurbish Windstar’s three sailing ships last year. Buying the Seabourn ships will double its fleet and make it possible for its ships to sail the world rather than mainly in the Mediterranean and Caribbean, as it does now. Upon adding the new ships, the cruise line will be marketed as “Global Windstar,” the project name for the acquisition. “What we’re excited about is being able to expand to other regions of the world,” Xanterra Marketing Vice President Betsy O’Rourke said. With six ships, it could conceivably cover almost every continent. “I think we’re certainly planning to put one in South America and one in Asia,” Xanterra CEO Andy Todd said. One of Windstar’s current ships is bigger than the Seabourn vessels, while two are smaller. The 148-passenger Wind Star and Wind Spirit currently sail Panama Canal and Caribbean itineraries. The 312-passenger Wind Surf sails the Caribbean from St. Maarten. Financially the new ships will provide Windstar with efficiencies that should boost profitability. “It’s harder to make returns on small ships because you don’t have economies of scale,” said Pam Conover, the recently named CEO of SeaDream Yacht Club and a former Seabourn CEO. “And the same is true of a brand.” “If you have a brand of 600 berths your marketing is spread out over those berths, and if you can double the size of the brand you can leverage that marketing cost per berth, and you can leverage that overhead cost per berth,” she said. Until 2007, Carnival Corp. owned Windstar, through its Holland America Line subsidiary. When it was sold, Carnival Chairman Micky Arison alluded to the lack of scale, saying the niche cruise business no longer fit with Carnival’s growth strategy for the future. Carnival continues to own Seabourn, but it is one of the smallest of its remaining brands. The sale of the “triplets” also sometimes referred to as the “little sisters” by Seabourn loyalists, will temporarily make Seabourn even smaller, reducing its capacity by 31%, to 1,350 berths. But when it announced the sale of the triplets, Seabourn also disclosed plans to order a new 450-passenger Odyssey-class ship, likely by the end of the current fiscal year. “Seabourn is already in discussion with shipbuilders,” company President Rick Meadows said. “The new ship will allow Seabourn to maintain much of its current guest capacity.” Beyond that, Seabourn has also clarified what its brand stands for and brought uniformity to its fleet that should simplify sales. The larger ships also inherently produce more revenue. “As I see it, it’s good for Seabourn. … They wanted to focus on the new class of vessels, which have been very, very successful for them,” Conover said. “It gives Seabourn the consistency in the hardware and the brand that they need.” One competitive issue for the triplets is that newer ships have more bona fide balconies. Each of the three older ships has six cabins with verandas and 36 “French balconies” (sliding glass doors to a slight balcony) that were retrofitted in 2000. The Seabourn experience is about more than the ships, said spokesman Bruce Good. “It is about the unique style of personalized service that the crew provides,” he said. Todd said the Windstar ships in general also lack balconies, but that encourages passengers to use the open deck space, which is a big part of the appeal of small-ship sailing. When the triplets are transferred to Windstar, the small-ship luxury category will increasingly be separated into a group of ships under 200 passengers and a group owned by bigger companies of more than 400 passengers. The latter group will include Seabourn, Silversea Cruises, Oceania, Regent Seven Seas, Azamara Club Cruises and Crystal Cruises. In the yacht-cruising segment, Windstar will compete with SeaDream, Compagnie du Ponant and, arguably, Paul Gauguin Cruises, which will go head-to-head with Windstar in Tahiti starting in 2014. All the lines tend to sail shallow draft vessels with a small passenger capacity to often overlooked or hidden ports unreachable by larger ships. They tend to have a high emphasis on water sports and include a custom-designed water sports platform as a key amenity. On SeaDream, “We can get those platforms down in 30 minutes, and in the Caribbean they’re down every day and guests are using the water toys,” Conover said. That helps boost the appeal of the yacht cruise segment with younger, baby boom-age cruisers, she said. One unknown is whether the current passenger base for the triplets will stay with the ships when they move to Windstar or move up to the larger Seabourn vessels. The small Seabourn ships have a very loyal following that prizes them primarily for their size. Todd said Windstar intends to bring its style to the Seabourn ships, which is very casual, with a different take on luxury. Jean Creasy, an agent in North Palm Beach, Fla., said she suspects that may be a deciding factor for her clients. “Seabourn is a really good company, and I think they’ll probably go and try the newer Seabourn ships,” she said. Conover said that when it comes to loyalty, interactions with the crew and fellow passengers are as important as anything. “If there are changes to the brand delivery, and I don’t know whether there are going to be or not, Windstar is a different brand experience,” she said. “I suspect some of those longtime loyalists may try it and see if they like it.” Follow Tom Stieghorst on Twitter @tstravelweekly. Windstar parent Xanterra diversifiesXanterra Parks & Resorts also made several noncruise acquisitions that will diversify its business mix. It will enter the tour business by acquiring VBT, a leading name in bicycle and walking tours. And it will add a second hotel to its resort portfolio by buying the Grand Hotel on the south rim of Arizona's Grand Canyon. VBT was founded in 1971 as Vermont Bicycle Tours. It now offers organized bike excursions in six U.S. regions, Italy, France and a dozen other European countries as well as New Zealand, Costa Rica and Thailand. It combines bicycle and barge tours in France, Holland, Belgium and Germany and offers walking tours in Europe, Central and South America. It also has ski and culinary tour divisions. The Grand Hotel bills itself as the newest resort in the Grand Canyon area. It is in Tusayan, Ariz., about a mile from the entrance to the south rim of Grand Canyon National Park. Built in 1998, its 121 rooms are decorated in bright Southwestern colors and its lobby has exposed timbers and stone, and a large flagstone fireplace, giving it the look and feel of a mountain lodge. Xanterra also owns the Kingmill Resort, in Williamsburg, Va., which it acquired in 2010. Xanterra's primary business is operating concessions in state and national parks, including Yellowstone and Rocky Mountain national parks. It operates six lodges in and around Grand Canyon National Park. It also owns the historic Grand Canyon Railway, which it bought in 2007. The company has its roots in the Fred Harvey chain of restaurants built in the American southwest along the route of the Atchison, Topeka and Santa Fe Railroad starting in 1876. -- T.S.